August 10, 2023

SAP S/4HANA RE-FX: Automation or not?

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Should I really do it or should I leave it alone? This is a question not only asked by Fettes Brot, but also by real estate management companies when it comes to starting optimization or automation projects in RE-FX. We have taken a closer look at this question.


What does RE-FX have to do?

Real estate management software must have a wide range of useful functionalities on board. It applies:

  • Prepare and provide information individually
  • be able to customize the software according to current requirements
  • Integrate bookkeeping with accounting
  • To be able to carry out planning on real estate objects
  • Allocate and settle costs to different entities/objects
  • uvm.

In all of the above, different stakeholders such as interested parties for properties, planners, municipalities, labor, users, administrators, disposal companies as well as banks and insurance companies have to be taken into account. Due to the complex process structure, the motivation of growing real estate management companies/companies with real estate-related processes is understandably high to curb the manual effort and at the same time ensure transparency. With regard to the latter, the software must likewise comply with accounting standards, as well as compliance and data protection regulations. Is all this possible with a high manual effort?

Our experience - also in the area of P2P and O2C processes (core competence of the Consult-SK Ltd.) - has shown that manual effort brings with it a higher error rate. Errors caused by incorrect entries or by working past the system. In addition, errors come in the form of unused business benefits due to delayed processing. But first, let's take a look at what the standard can do.


RE-FX in SAP Standard: Performance and Outlook

The mapping of real estate management processes - on the basis of workflow control - also with the help of Fiori apps (e.g. order acceptance by tradesmen or completion notifications to tenants) are available as standard. Likewise, the collection of ESG-compliant data can be realized by an additional module.

The creation of master and contract data can be done manually by the users or automated, depending on the amount and complexity of the data. Subsequently, the process-oriented accounting takes place with the debit position, invoice printing, payment and dunning runs. These data runs can be simulated, cancelled and repeated. An important feature of the RE-FX module is the automated adjustment of conditions. RE-FX can perform adjustments automatically, e.g. related to graduated rents, rent indexes or index rent agreements.

In terms of usability and mobility, S/4HANA is innovative with over 15,000 apps in the Fiori Library. Nevertheless, SAP is already working on its successor. Through a strategic partnership between SAP and Planon is to combine real estate management and intelligent building management solutions with SAP's market-leading ERP functions in the future:

"For customers, this adds value across the enterprise, including improved compliance and IoT-powered business insights and automation. They will also benefit from streamlined solution integration that provides better operations across departments involved in managing, maintaining and supporting real estate facilities such as finance, purchasing, accounting, HR and business-specific functions such as property and facilities management. SAP Business Technology Platform will serve as the central integration platform for the new combined solutions."


Conclusion: More time for qualitative activities

With all the obvious advantages in the standard, it must be taken into account that RE-FX has a specific target group due to the scope of the project. A property management company with less than 1,000 units will not necessarily need SAP S/4 HANA RE-FX, but for a large corporation, the cost savings/resource conservation outweigh the opportunity cost. In addition to the number of rental units, the decision "Automation - yes or no?" depends on the organization's objectives as well as the data quality/up-to-dateness and fine-grainedness of the processes.

One thought needs to be added here: Even if the will to automate is there, unfortunately not everything can always be automated. Processes or administrative steps that occur extremely infrequently or are handled particularly individually often remain manual. In our experience, the well-known 80/20 rule from economics works very well here: With 20 % of its services, 80 % of administrative activities can be handled automatically. This creates space for qualitative and thus value-adding activities.